Resources for Your Business

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Others terms in this glossary are provided to help plan participants and beneficiaries understand terminology used in fee disclosure documents and under the plan.

Account Balance*

The dollar value of a participant’s account.

Account Maintenance Charge

An annual flat-dollar charge for each participant account.

Accumulation Units*

A device used to measure the value of a separate account investment option.

Additions

Transactions that cause an increase in an account balance.

AdvicePlus Fee

An annual fee billed to the plan sponsor electing Advice Plus, an online tool that provides education and assistance to participants in selecting investments that meet their financial needs for retirement planning. The assistance includes scoring, deferral changes, investment election changes and one-time rebalance activity.

Advisor Fee

A fee to a plan sponsor in an amount separately agreed upon with a registered investment advisor or an investment advisor representative for services to the plan. No portion of this fee will be retained by AUL.

Allocated*

Invested, as directed, into an account.

Annual Admin Service Fee

An annual fee based on plan assets.

Asset Charge*

This is a charge equal to a percentage of your account's separate account investments.

Benchmark*

The name and returns of an appropriate broad-based securities market index over 1-, 5-, and 10-year periods that are provided as a comparison to the performance data for a separate account investment option.

Brokerage Window

An investment alternative available outside of the AUL group annuity contract that allows investment of plan assets through a brokerage firm.

Brokerage Window Participant Fee

A fee assessed to any participant electing to invest a portion of his/her account with a brokerage firm.

Brokerage Window Plan Annual Maintenance Fee

An annual fee to a plan sponsor that elects to offer participants a brokerage window.

Brokerage Window Plan Setup Fee

A one-time fee to a plan sponsor to establish the brokerage window option.

Cash Value/Withdrawal Value

The portion of a participant’s account balance available to provide certain lump-sum payments.

Contribution Census System Non-Usage Fee

An annual fee to a plan sponsor that does not use AUL’s electronic census tool.

Covered Service Provider

An entity receiving compensation for providing services to a plan.

Deductions*

Transactions that cause a reduction in a participant’s account balance.

Distribution Fee

A fee for each lump-sum distribution paid.

Electronic Deconversion File Package

Historical, indicative, and financial data that may be sent to the plan's successor service provider.

Eligibility Provisions

Provisions in a plan stating the requirements for an employee to participate in the plan.

Expense Ratio*

Expense ratio is the annual operating expenses of the underlying mutual fund divided by the average net assets of the underlying mutual fund. The expense ratio is retained by the investment management company. Gross expense ratio is the unsubsidized annual operating expenses before any fee waivers or expense reimbursements. Net expense ratio is the subsidized annual operating expenses after fee waivers or expense reimbursements.

Financial Soundings Fee

A charge deducted from the accounts of participants that use Financial Soundings’ investment advice service. No portion of this charge will be retained by AUL.

Fixed Interest Account (FIA)*

An investment option supported by the general assets of AUL where a fixed rate of interest is credited for a stated period.

Forfeiture Reallocations

Nonvested portions of terminated participants’ accounts that are reallocated to the accounts of remaining eligible plan participants as provided by the plan.

Gains/Losses*

Gains consist of interest credited to amounts in the fixed interest account and in the stable value account and any increase in the value of amounts invested in an AUL separate account. Losses consist of any decrease in the value of amounts invested in an AUL separate account.

Group Annuity

A contract between AUL and a plan sponsor, a plan trustee or a custodian that defines the rights and responsibilities of the parties and the treatment of invested funds.

Guaranteed Interest Fund (GIF)

An investment option supported by the general assets of AUL where a fixed rate of interest is credited.

Hardship Review Fee

A fee charged by AUL for hardship distribution processing.

Installation Fee

A one-time fee to install the plan on AUL’s recordkeeping system.

Investment Account*

Each distinct portfolio established within AUL’s separate accounts.

Investment Advisor Fee

A fee to a plan sponsor in an amount separately agreed upon with a registered investment advisor or an investment advisor representative for services, including models, to the plan. No portion of this fee will be retained by AUL.

Investment Option Charge (IOC)*

A charge equal to the asset charge plus the expense ratio.

Liquid Interest Fund (LIF)

An investment option supported by the general assets of AUL where a fixed rate of interest is credited.

Loan Administration Fee

A flat-dollar fee to a participant account each quarter for each outstanding plan loan.

Loan Initiation Fee

A flat-dollar fee to a participant account for each outstanding plan loan.

Market Value Adjustment (MVA)

The MVA is a percentage of amounts withdrawn from the fixed interest account at contract termination or to provide certain participant benefits. The percentage is determined by comparing interest rates earned at the time of withdrawal on amounts withdrawn to the interest rate applicable at the time to new deposits to the fixed interest account. The resulting amount may be added to, or subtracted from, the amount withdrawn.

Mesirow 3(38) Fiduciary Service Fee

A fee paid quarterly by plan sponsors that elect Mesirow 3(38) third-party fiduciary investment assistance for the plan. No portion of this fee will be retained by AUL.

Minimum Contribution Fee

A flat-dollar fee to a plan sponsor if contributions within a plan year are less than the minimum underwriting guidelines.

A percentage of the assets in separate account investment options at month-end paid to the plan’s third-party administrator. No portion of this fee will be retained by AUL.

Payroll Deduction Date

The payroll date that coincides with each contribution to a participant's account.

Per Participant Account Fee

A fee for participant accounts existing at the end of a quarter.

Plan

A program maintained by a plan sponsor to accumulate funds for retirement.

Plan Expense

An expense for plan administrative or other plan services provided by AUL that can be paid from plan assets/participant accounts at the direction of the plan sponsor.

Plan Sponsor

An employer or other entity that establishes and maintains your plan.

Plan Sponsor Advice Fee

A fee paid quarterly by plan sponsors that elect the Mesirow 3(21) third-party investment advice for the plan.

ProNvest Fee

A fee assessed to participant accounts in an amount separately agreed upon by the participant with ProNvest for its services to the participant. No portion of this fee will be retained by AUL.

QDRO

Qualified Domestic Relations Order requiring establishment of a participant account for the spouse.

QDRO Review Fee

A fee to a plan sponsor for AUL’s QDRO processing.

Redemption Fee*

A fee assessed by an investment management company if shares of a particular mutual fund are purchased and sold within the minimum holding period determined by the investment management company. This fee is applied against the participant's account. No portion of this fee will be retained by AUL. A detailed description of a redemption fee, and a list of fees as of a specific point in time, can be found here.

Investment Advisor Fees

A fee to a plan sponsor in an amount separately agreed upon with a registered investment advisor or an investment advisor representative for services, including the service of modeling, to the plan. No portion of this fee will be retained by AUL.

Revenue Sharing*

The portion of the mutual fund expense ratio that is paid to AUL.

Sales Compensation Disclosure

The compensation payable to a sales producer of AUL for selling and servicing a group annuity contract.

Separate Accounts*

A pool of assets that is segregated from AUL’s general account to provide participants the opportunity to experience the investment results of the underlying assets, generally mutual funds.

Stable Value Account*

An investment option supported by the general assets of AUL where a fixed rate of interest is credited for a stated period.

Test File Package

Historical and indicative data that may be sent to a plan's successor service provider.

Third Party Plan Expense

An expense for plan administrative, legal, accounting, or other services provided by service providers other than AUL that can be paid from plan assets/participant accounts at the direction of the plan sponsor.

TPA Fee

A fee to a plan sponsor in an amount separately agreed upon with a third-party administrator. No portion of this fee will be retained by AUL.

Transaction Date

The date on which a transaction occurs.

Unit Value*

The dollar value of an accumulation unit of a separate account investment option.

Variable Investment Plus (VIP) Factor

A monthly amount credited to a participant’s account determined by multiplying a percentage by that participant’s month-end separate account assets.

Vesting

The process by which a participant acquires a non-forfeitable right to his/her account balance under the terms of a retirement plan.

Weighted Average Interest Rate

An average interest rate that takes into consideration each interest rate being credited in a participant’s account and the corresponding balance to which it is being credited.

Withdrawal Charge

A percentage of the account balance that varies according to the terms of the group annuity contract. (May not apply to all withdrawals.)

Withdrawal Value/Cash Value

The portion of a participant’s account balance that is available to provide certain lump-sum payments.

Test to ensure that the total of each participant’s allocated contributions,including deferrals, and forfeitures for the limitation year (generally the same as the planyear) has not exceeded the annual additions limit (aka Annual Additions Limit test)

414(s)

See Compensation Test.

416

See Top Heavy Test.

457 Plan

A nonqualified deferred compensation plan that is maintained by an eligibleemployer. An eligible employer may be a State, a political subdivision of a State, anagency or instrumentality of a or political subdivision of a State, or a tax exemptorganization.

Actual Contribution Percentage Test (ACP)

Test to ensure that the employer matchand, if applicable, employee after-tax contributions made during the plan year do notdiscriminate in favor of highly compensated employees (HCEs).

Actual Deferral Percentage Test (ADP)

Test to ensure that the elective deferrals madeduring the plan year do not discriminate in favor of highly compensated employees(HCEs). Not applicable to 403(b)plans.

Affiliated Service Group

Two or more entities having a service and possible ownershiprelationship.

Alternate Payee

Any spouse, former spouse, child or other dependent of a participantwho is recognized by a qualified domestic relations order (QDRO) as having a right toreceive all or a portion of the retirement benefits payable under a plan to a participant.

Annual Additions Limit Test

See 415 Limit Test.

Basis

An amount in a plan that has been previously subject to taxation.

Benefits, Rights and Features (BRF) Test

Test to ensure that a benefit, right or featuredoes not discriminate in favor of highly compensated employees (HCEs). May includenondiscrimination testing of contributions and benefits, benefits, rights and features,and/or amendments and terminations.

Blackout Period

Period of time when participants are not permitted to take loans, obtaindistributions, or direct investments.

Break in Service

A 12-month computation period during which a participant is creditedwith less than 501 hours of service.

Catch-Up Contribution

Contributions of deferrals above and beyond the limitsestablished for retirement contributions. They provide an opportunity to "catch-up" foryears in which individuals nearing retirement or returning to the work force may not havebeen able to contribute to a retirement plan. Participants who are, or will become 50during the calendar year are eligible to make catch-up contributions if one of four limitshas been exceeded. The limits are: (a) the maximum deferral dollar deferral limit; (b) theannual additions limit; (c) the plan’s deferral limit; (d) the ADP testing limit.

Collectively Bargained Plan

A plan that is maintained pursuant to a collectivebargaining agreement. Sometimes referred to as a "union" plan.

Compensation Test

Test to ensure that the compensation used for nondiscriminationtesting is nondiscriminatory. Required if definition of compensation excludes types ofcompensation such as bonuses, overtime, commissions, etc. Note: AUL does notcurrently provide this testing service.

Controlled Group

Two or more corporations or trades or businesses that are part of aparent-subsidiary or brother-sister relationship. Parent-subsidiary relationship exists if aparent organization owns 80% or more of another corporation or trade or business. Abrother-sister relationship exists if (1) five or fewer persons who are individuals, estatesor trusts own 80% or more of each company AND (2) the same five or fewer personstogether own more than 50% of each company, taking into account the ownership of eachperson only to the extent such ownership is identical with respect to each organization.

Corrective Distribution

A distribution of excess deferrals, excess contributions, andexcess aggregate contributions in order to satisfy statutory limits or ADP and ACPtesting.

Coverage Test

Also referred to as the 410(b) Coverage Test or 410(b) test. Performed toensure that a minimum percentage of NHCEs are eligible to receive benefits in relation tothe percentage of HCEs who receive benefits

Cross Testing

Testing performed on allocations that are expressed as a future benefit iscalled "cross testing". See General Test.

Defined Contribution Plan

A plan that provides an individual account for eachparticipant, with benefits based solely on the value of that account.

Delinquent Filer Voluntary Compliance Program (DFVC)

The Delinquent FilerVoluntary Compliance (DFVC) Program gives plan administrators a way to avoidhigher civil penalties on the late filing of the Form 5500 Annual Return/Report bysatisfying the program’s requirements and paying a reduced fee.

The amount by which matching contributions andvoluntary employee contributions made on behalf of HCE’s exceeds the amountpermitted by the ACP test.

Excess Annual Addition

The amount by which total contributions made to a planexceed the Annual Additions Limit or 415 Limit test.

Excess Contribution

The excess of the elective contributions (including qualified nonelectiveand matching contributions that are treated as elective contributions) made to a401(k) plan on behalf of HCE’s for the plan year over the maximum amount of suchcontributions permitted under the ADP test for such plan year.

Excess Deferral

The amount by which elective deferrals made on behalf of an employeeby all employers exceeds the annual cap in effect for that taxable year (402(g) limit).

Excludable Employees

This is a term used in the coverage and nondiscriminationtesting rules. It refers to employees that are disregarded when identifying the employeesthat must be taken into account to determine whether the plan satisfies the coverage testsunder IRC §410(b), and certain nondiscrimination tests under the §401(a)(4) regulations.In general, an employee is excludable if he falls into any one of the following categories:1) he fails to satisfy the plan’s minimum age and service requirements for eligibility toparticipate, 2) he is a collective-bargaining employee and the applicable test is beingapplied to non-collective-bargaining employees, 3) he is a nonresident alien without U.S.source income, or 4) he terminates employment during the plan year and is credited withless than 501 hours of service for that year. There are exceptions to these rules.

Family Attribution

Assignment of ownership among family members fordetermination of Highly Compensated and Key status. Family members include thespouse, parents, children, and grandparents. Family members for this purpose do notinclude siblings or in-laws.

Favorable Determination Letter (FDL)

Issued by the IRS on the qualified status of aplan. It may be issued upon establishment, amendment or restatement or termination of aplan.

Fidelity Bond

Section 412 of ERISA requires that fiduciaries and other persons whohandle or are responsible for the assets of a qualified plan must be bonded. The bond isto reimburse the plan if any plan assets are lost through fraud or dishonesty of personshandling plan funds. Fraud or dishonesty includes such acts as theft, forgery,embezzlement, misappropriation, or willful misapplication of plan assets.

Forfeitures

The benefits that a participant loses if he or she terminates employmentbefore becoming eligible for full retirement benefits under the plan. For example, aparticipant who leaves the service of an employer at a time when he or she will receive60 percent of benefits forfeits the remaining 40 percent.

Former Key Employee

A former key employee is an employee who is currently a nonkeyemployee but who was a key employee in any prior plan year. The distinctionbetween former key employee and non-key employee is important for accurate top heavytesting.

General Test

Test to ensure that the employer contribution amounts not tested underADP or ACP (i.e., profit sharing or money purchase contributions) do not discriminate infavor of HCEs. May test using allocation rates or benefit rates (converting current valueto a future benefit). Testing allocations expressed as a future benefit is called "crosstesting".

Highly Compensated Employee (HCE)

An employee is considered highlycompensated if he or she was more than a five-percent owner at any time during thecurrent year (plan year beginning in 2007) or the preceding plan year (plan yearbeginning in 2006); OR had compensation from the employer in excess of $100,000during the preceding year and, if the employer so elected in their adoption agreement orplan document, was in the top-paid group of the employer. Also see "FamilyAttribution" regarding determination of ownership.

Individually-Designed Plan

A plan document that can contain provisions which couldcause the plan to fail one or more of the following qualification requirements: the minimum coverage requirements of Internal Revenue Code (Code) section (§) 410(b)the nondiscrimination requirements of Code §401(a)(4); the requirement under Code§414(s) that the plan's definition of compensation be nondiscriminatory.

Key Employee

Key employees include employees (or former employees) who, at anytime during the plan year (plan year beginning in 2006), met any one of the followingcriteria: an officer having annual compensation greater than $135,000 (the $135,000 limitis subject to Cost of Living Adjustments);a more than 5% owner of the employer; or amore than 1% owner with compensation in excess of $150,000. Also see "FamilyAttribution": regarding determination of ownership.

Leased Employee

A leased employee is an employee who renders services on asubstantially full-time basis for at least one year, under the primary direction or control of the employer.

Limitation Year

The section 415 limits are determined on a limitation year basis. The"limitation" year can be defined by the plan as any 12-month period. Usually thelimitation year is defined as the plan year.

Mandatory Cash Out (MCO)

Applies to plans that have a provision in their documentthat forces the distribution of a terminated participant. This can happen without theparticipant's consent, but is only allowed if the benefit is less than $5,000. Unless theparticipant elects otherwise, amounts greater than $1,000 must automatically be rolledover into an IRA. Distributions of $1,000 or less can be distributed directly to theparticipant.

Money Purchase Pension Plan

A defined contribution plan under which theemployer’s contributions are mandatory and are usually based on each participant’scompensation. Retirement benefits under the plan are based on the amount in theparticipant’s individual account at retirement.

Multi-employer Plan

A pension plan maintained under a collective bargainingagreement, that covers the employees of more than one employer. Generally, the variousemployers are not financially related but rather are engaged in the same industry.

Multiple Employer Plan

A pension plan maintained by more than one unrelatedemployer.

Non-Exclusion Period

Distribution from Roth deferrals is not qualified if it is withinfive years of the earliest of: first calendar year participant makes a Roth deferral to thatplan; OR if participant rolled Roth money from another 401(k) or 403(b) plan, then theirst calendar year participant made a Roth deferral to the other plan.

Non-Highly Compensated Employee (NHCE)

An employee who does not satisfy the definition of a highly compensated employee.

Non-Qualified Church-Controlled Organization (Non-QCCO)

Any church controlled tax-exempt organization described in Code Section 501(c)(3) that: Offer goods, services, or facilities that are sold at a nominal charge that is substantially less than the cost of providing goods, service, or facilities; and Normally receives more than 25% of it’s support from either a government source or receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in activities that are not unrelated trades or business or both.

Nonresident Alien (NRA)

A nonresident alien employee is an employee who is not a U.S. citizen or a nonresident alien of the U.S. For additional information on nonresident alien status refer to IRC §410(b)(3)(C) and Treasury Regulation §1.410(b)-6(c).

Non-Standardized Plan

A plan that is a master or prototype plan, which consists of a basic plan document and an adoption agreement that contains options which could cause the plan to fail one or more of the following qualification requirements: the minimum coverage requirements of Internal Revenue Code (Code) section (§) 410(b);the nondiscrimination requirements of Code §401(a)(4);the requirement under Code §414(s) that the plan's definition of compensation be nondiscriminatory.

Normal Retirement Age (NRA)

Under a qualified plan, may not exceed the later of the date the participant reaches age 65 or the 5th anniversary of the participant’s participation date.

Off-Calendar Year Plan

Plan year that starts on a day other than January 1.

Permitted Disparity

The consideration of Social Security benefits when determining contributions or benefit accruals.

Plan Document

The written document setting forth the terms of the plan, including the eligibility and vesting requirements, how benefits are determined, and when benefits may be distributed. If the plan is intended to be a qualified plan, the document must state the requirements of IRC §401(a). The plan document may take the form of an individually designed plan, a master/prototype plan, a regional prototype plan, or a volume submitter plan.

Plan Year

Any 12-consecutive-month period that has been chosen by the plan for keeping its records. The 12-month period may be the calendar year, a fiscal year, or a policy year (if insurance is used to fund all plan benefits). The plan year does not have to coincide with the employer’s taxable year or begin on the first day of the month. Change of a plan year usually requires the consent of IRS.

Qualified Church-Controlled Organization (QCCO)

Any church-controlled tax Exempt Organization described in Code Section 501(c)(3) related to the Plan Sponsor other than a Non-Qualified Church-Controlled Organization.

Qualified Distribution

Related to taxation of earnings attributable to Roth deferrals. A distribution is qualified if made after a participant reaches age 59 ½ or if there is a distributable event (death or disability) AND the 5-year nonexclusion period has been satisfied.

Qualified Domestic Relations Order (QDRO)

A QDRO is a judgment or decree issued pursuant to State domestic relations or community property laws (usually as a result of a divorce) that meets certain standards and assigns all or a part of a Participant’s benefit in the Plan to an Alternate Payee.

Qualified Joint and Survivor Annuity (QJSA)

An annuity payable at least annually for the life of the participant with a survivor annuity payable for the life of the participant’s spouse following the death of the participant. Certain plans must offer QJSAs as a benefit payment option.

Qualified Matching Contribution (QMAC)

Matching contributions that are 100 percent vested at all times and that are subject to the same distribution restrictions as elective contributions.

Qualified Nonelective Contributions (QNECs)

Nonelective contributions that are 100 percent vested at all times and that are subject to the same restrictions of distribution as elective contribution.

Qualified Preretirement Survivor Annuity (QPSA)

A life annuity payable to the surviving spouse of a participant who dies before payment of benefits begin. Only required if joint and survivor rules apply.

Qualified Separate Line of Business (QSLOB)

Employer may elect to perform certain testing requirements on the basis of separate lines of business rather than an employer wide basis. To be a separate line of business, the business must be organized and operated separately from the remainder of the employer, must have separate financial accountability and must satisfy the regulatory standards for a separate workforce and separate management.

Remedial Amendment Period (RAP)

Period of time during which a plan can be amended retroactively to conform the plan to legal requirements (e.g., to update a plan for new legislation such as GUST)

Required Minimum Distribution (RMD)

Internal Revenue Service rules regarding the distribution of retirement plan assets. RMDs may need to begin upon attainment of age 70½ for participants who are a 5% owner of a company or retired from the company (regardless of ownership).

Roth Deferrals

Available to plans that contain a Roth provision. Contributions made on an after-tax basis whose earnings are tax-free when distributed if the distribution is deemed to be a qualified distribution.

Safe Harbor 401(k) Plan

Plan designed to be exempt from ADP/ACP testing if the annual notice and employer contribution requirements are satisfied.

SIMPLE 401(k) Plan

Plan designed to be exempt from ADP/ACP testing if certain requirements or limits are met. The annual deferral limit is less than the annual 402(g) limit.

Standardized Plan

A plan that is a master or prototype plan, which consists of a basic plan document and an adoption agreement that contains options which would not cause the plan to fail one or more of the following qualification requirements: the minimum coverage requirements of Internal Revenue Code (Code) section (§) 410(b);the nondiscrimination requirements of Code §401(a)(4);the requirement under Code §414(s) that the plan's definition of compensation be nondiscriminatory.

Summary Annual Report (SAR)

The DOL requires that each participant in a pension plan receive a summary annual report. This report must be distributed within 9 months of the plan year-end or within two months after the period of time after extension. The SAR contains basic financial and participant data, minimum funding information if a Money Purchase Plan and disclosure about the right to additional information.

Summary of Material Modifications (SMM)

A summary of amendments and changes made to the plan that is distributed to participants in the interim period until a new SPD is distributed.

Summary Plan Description (SPD)

A simplified and condensed summary of the terms of the plan which describes the benefits to which participants may be entitled.

Taxable Wage Base

The maximum amount of wages that are considered for Social Security purposes. Sometimes referred to as the Social Security Taxable Wage Base (SSTWB).

Top Heavy Test

Test is performed to determine whether the account values of key employees make up a disproportionate percentage of the total assets of the plan compared to non-key employees

Top Paid Group

Employees who are among the highest paid 20% of all the employees of the employer. See Highly Compensated Employee.

Note:

This index is intended for general information purposes only and does not and is not intended to constitute a comprehensive description of the subject matter contained herein. You should consult with your AUL Representative or legal counsel to determine how the subject matter discussed applies to your specific circumstances.